TY  - JOUR
AU  - Cutler,David M.
AU  - Madrian,Brigitte C.
TI  - Labor Market Responses to Rising Health Insurance Costs: Evidence on Hours Worked
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5525
PY  - 1996
Y2  - April 1996
UR  - http://www.nber.org/papers/w5525
L1  - http://www.nber.org/papers/w5525.pdf
N1  - Author contact info:
David M. Cutler
Department of Economics
Harvard University
1875 Cambridge Street
Cambridge, MA  02138
Tel: 617/496-5216
Fax: 617/496-8951
E-Mail: dcutler@harvard.edu

Brigitte C. Madrian
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617-495-8917
Fax: 617-496-5960
E-Mail: Brigitte_Madrian@Harvard.edu
AB  - Increases in the cost of providing health insurance must have some effect on labor markets, either in lower wages, changes in the composition of employment, or both.  Despite a presumption that most of this effect will be in the form of lower wages, we document in this paper a significant effect on work hours as well.  Using data from the CPS and the SIPP, we show that rising health insurance costs over the 1980s increased the hours worked of those with health insurance by up to 3 percent.  We argue that this occurs because health insurance is a fixed cost, and as it becomes more expensive to provide, firms face an incentive to substitute hours per worker for the number of workers employed.
ER  -